What’s the Minimum Rent Required to Pass a Buy-to-Let Stress Test?

There is a minimum rent required to pass a buy-to-let stress test, but the exact figure depends on the lender, borrower type, tax position, and interest rate assumptions.

Most UK buy-to-let lenders require the expected rental income to exceed the mortgage payment by a set margin, known as the Interest Coverage Ratio (ICR). In simple terms, this means the rent must usually cover between 125% and 145% of the stressed mortgage payment, although higher ratios are common for higher-rate taxpayers.

In 2026, stress testing is tighter than many landlords expect. Lenders often calculate affordability using a notional interest rate that is higher than the actual pay rate, and they may apply additional buffers depending on whether the property is owned personally or through a limited company.

Missing one detail, such as how rent is assessed or which tax band applies, can lead to a property failing the stress test even if it appears profitable. Understanding how minimum rent is calculated can prevent wasted valuations, delayed purchases, and avoidable declines.

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Last updated: 16 January 2026

Table of Contents

1. What is a buy-to-let stress test?

2. Why lenders use rental stress testing

3. What is the Interest Coverage Ratio (ICR)?

4. What is the minimum rent most lenders require?

5. How tax status affects the stress test

6. The lender acceptance spectrum explained

7. Why this matters more now

8. How stressed interest rates are set

9. Personal vs limited company buy-to-let

10. Step-by-step stress test calculation

11. New purchases vs remortgages

12. Case study, rent fails then passes

13. Pros and cons of strict stress testing

14. Policy exceptions and lender discretion

15. Myth vs reality

16. Expert tips and common mistakes

17. Hidden costs landlords forget

18. Impact on borrowing amounts

19. Broker insights, what we see most often

20. Frequently asked questions

21. Glossary of key terms

22. Checklist for next steps

What Is a Buy-to-Let Stress Test?

A buy-to-let stress test is a lender’s way of checking whether a property’s rental income can still cover the mortgage if interest rates rise.

Rather than using the actual mortgage rate, lenders apply a higher notional interest rate and then require the rent to exceed the stressed payment by a set percentage.

This protects both the lender and the borrower against future rate increases.

If you’re new to the process, our guide on buy-to-let mortgages explains how lenders assess rental income and affordability in more detail.

Why Do Lenders Use Rental Stress Testing?

Rental stress testing helps lenders:

• Reduce default risk

• Account for interest rate volatility

• Reflect changes to landlord taxation

• Ensure long-term sustainability

Since mortgage interest tax relief was restricted, lenders have relied more heavily on rental coverage rather than personal income.

What Is the Interest Coverage Ratio (ICR)?

The Interest Coverage Ratio is the percentage by which rent must exceed the stressed mortgage payment.

Common ICR levels include:

• 125%, often used for basic-rate taxpayers or limited companies

• 140%–145%, often applied to higher-rate taxpayers

• Higher ratios for certain property types or locations

For example, if the stressed mortgage payment is £1,000 per month and the ICR is 145%, the required rent would be £1,450 per month.

What’s the Minimum Rent Most Lenders Require?

There is no single minimum rent figure. Instead, the required rent is calculated based on:

• Loan amount

• Stressed interest rate

• ICR percentage

• Borrower tax status

As a rough guide:

• Many properties need rents that are 30%–50% higher than the mortgage interest

• Higher borrowing or higher tax bands increase the required rent

• Lower loan-to-value can reduce the stress requirement

A property that looks profitable on paper may still fail a lender’s model.

How Does Tax Status Affect the Stress Test?

Tax treatment plays a significant role.

Personal ownership

• Higher-rate taxpayers usually face higher ICRs

• Mortgage interest relief restrictions are factored in

Limited company ownership

• Often assessed at lower ICRs

• Corporation tax treatment is considered

• Rental stress tests may be more flexible

This difference is why many landlords use limited companies, although suitability varies.

The Lender Acceptance Spectrum Explained

Not all lenders stress test rent in the same way.

At one end are lenders with rigid models and high ICRs. At the other are lenders with more flexible approaches, including:

• Lower stress rates

• Reduced ICRs for low loan-to-value

• Different treatment for limited companies

Knowing where a lender sits on this spectrum can significantly change borrowing outcomes.

Why This Matters More Now

Over the last 12 months:

• Interest rates have remained elevated

• Rental demand has increased

• Stress test assumptions have not eased

• Portfolio scrutiny has intensified

Many landlords are surprised to find that rising rents do not always offset tighter stress testing.

How Are Stressed Interest Rates Set?

Lenders typically:

• Apply a fixed stress rate above current market rates, or

• Use a pay-rate plus buffer approach

Even if you secure a low pay rate, the stress rate used for affordability may be significantly higher.

Personal vs Limited Company Buy-to-Let

Limited company applications often:

• Use lower ICR thresholds

• Focus more on property performance

• Place less emphasis on personal tax band

Related reading: Limited Company Buy-to-Let Mortgages.

Personal buy-to-let cases are more sensitive to the borrower’s income tax position.

Step-by-Step Stress Test Calculation

1. Confirm loan amount

2. Apply lender’s stress interest rate

3. Calculate monthly stressed payment

4. Apply ICR percentage

5. Compare against expected rent

If the rent falls short, borrowing may be reduced.

New Purchases vs Remortgages

Remortgages sometimes benefit from:

• Lower stress rates

• More flexible treatment of existing rents

• Portfolio-level assessment

New purchases are often assessed more conservatively.

If this is your first investment property, our guide for new landlords covers deposits, lender criteria and common pitfalls.

Case Study, Rent Fails Then Passes

A landlord purchasing a terraced house failed one lender’s stress test due to a high ICR. By reducing the loan-to-value and selecting a lender with a lower stress rate, the same rent passed affordability comfortably.

The issue was lender model choice, not rental demand.

Pros and Cons of Strict Stress Testing

Pros

• Encourages sustainable borrowing

• Reduces long-term risk

• Protects against rate rises

Cons

• Limits borrowing capacity

• Can restrict portfolio growth

• Does not always reflect real rental markets

Policy Exceptions and Lender Discretion

Some lenders may allow flexibility where:

• Loan-to-value is lower

• Portfolio performance is strong

• Borrower has significant experience

• Property demand is proven

These options are rarely visible without broker input.

Myth vs Reality

Myth: Rent just needs to cover the mortgage

Reality: It usually needs to exceed it significantly

Myth: Higher rent always solves affordability

Reality: Stress rates and ICR still apply

Expert Tips and Common Mistakes

• Do not rely on estate agent estimates alone

• Do not assume all lenders stress test equally

• Do not overlook tax band impact

• Do not ignore portfolio-level rules

Hidden Costs Landlords Forget

• Letting agent fees

• Void periods

• Maintenance allowances

• Higher lender fees on specialist products

These costs are not always included in stress tests.

Impact on Borrowing Amounts

Stress testing often caps borrowing well below expectations. Understanding this early helps set realistic purchase budgets.

Broker Insights, What We See Most Often

Most buy-to-let declines occur because:

• Rent fails lender-specific stress models

• Wrong ownership structure chosen

• Incorrect assumptions about tax treatment

These are avoidable.

Frequently Asked Questions

Is 125% rent coverage enough?

Sometimes, but often only for limited companies or basic-rate taxpayers.

Do all lenders use the same stress rate?

No, this varies widely.

Can personal income help?

Rarely for buy-to-let, but sometimes for portfolio cases.

Can stress tests be appealed?

Occasionally, with strong evidence.

Glossary of Key Terms

• ICR: Interest Coverage Ratio

• Stress rate: Notional interest rate used for affordability

• Rental coverage: Rent compared to mortgage payment

Checklist for Next Steps

• Confirm expected rent realistically

• Understand your tax position

• Check loan-to-value impact

• Speak to a broker early

Final Thought

We are expert mortgage advisers with extensive experience helping landlords structure buy-to-let mortgages that pass lender stress testing.

Get in touch today on 01275 399299.

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Written by Ben Stephenson, CeMAP-qualified Mortgage Broker

Reviewed by Mortgage Experts at Manor Mortgages

Manor Mortgages is an FCA-authorised mortgage broker (FRN 496907), established for nearly 30 years. We are Bristol-based mortgage brokers assisting clients nationwide and are rated 4.9 on Google. We have helped thousands of clients successfully secure the right mortgage, including many with complex and mixed-use properties.